Aug. 22 (Bloomberg) -- Canadian orders for TransCanada
Corp. to upgrade emergency shut-off systems on its Keystone
crude pipeline are raising scrutiny in the U.S. as the company
seeks to expand the system to the Gulf of Mexico.

The National Energy Board found that some emergency shut-down systems at pumping stations along the Keystone line in
Manitoba and Saskatchewan weren’t equipped with sufficient
alternate power sources, according to an Aug. 17 letter to
Calgary-based TransCanada posted on the board’s website
yesterday. The board denied TransCanada’s request for an
exemption from the safety requirements.

TranCanada said in May it would build the $7.6 billion
Keystone XL pipeline expansion in segments after U.S. President
Barack Obama rejected an application for the full project on
concerns about potential oil spills fouling water supplies in
Nebraska. Opponents of the pipeline are using the Canadian
action to argue for closer scrutiny of the proposed U.S. line,
Carl Weimer, executive director for the Bellingham, Washington-based Pipeline Safety Trust, said in an e-mail today.

The U.S. section of Keystone XL will have 18 pump stations,
and may have more depending on its route through Nebraska,
according to TransCanada’s permit application to the U.S. State
Department. TransCanada has already agreed to U.S. demands to
install backup generators on the Keystone XL pipeline, James
Millar, a company spokesman, said in an e-mail today.

Oil Sands

The board’s order shows there is increasing concern in
North America about the transportation of crude from Canada’s
oil sands, Susan Casey-Lefkowitz, a director at the Natural
Resources Defense Council environmental group in Washington,
said in a telephone interview.

“The U.S. government is finding that tar-sands oil behaves
differently and there’s a hard look happening right now in the
U.S. about whether we need stronger safety regulations,” Casey-Lefkowitz said.

TransCanada has until Sept. 17 to submit a plan for
installing backup power to Canadian regulators and a year after
that to do the work, the energy board said. TransCanada’s Millar
couldn’t estimate the cost of providing the backup generators
ordered by the board.

The existing Keystone pipeline runs 2,149 miles (3,460
kilometers) from Hardisty, Alberta, to the U.S. Midwest.
Keystone XL would carry 830,000 barrels a day from Alberta to
Gulf Coast refineries.